The NYC Real Estate Referral Process for Out-of-State Agents

New York Real Property Law §442 lets a NYC broker pay part of a commission to a person regularly engaged in the real estate brokerage business in a state outside New York, with no New York license required. The condition that matters most is timing: the referral is written up before any work begins. In my 25+ years as a Licensed Real Estate Associate Broker with Keller Williams NYC, I sign the referral paperwork before anyone contacts the client.

Are agent referral fees legal in New York?

Yes. Section 442 of the Real Property Law bars a NY broker from sharing a fee with anyone for help in a sale, lease or loan unless that person is a licensed NY salesperson associated with the broker, a licensed NY broker, or a person regularly engaged in the real estate brokerage business in another state. The Department of State describes the ban as one on sharing a commission as compensation for activity that would require a license. The practical rules:

• The referring agent should hold an active license in good standing in their own state, and so should the receiving agent in New York.
• The fee is paid broker to broker, then split inside each brokerage per its own agreement with its agent.
• No New York license is required to refer a New York client and be paid.
• The arrangement is documented before the work starts, not after a deal is moving.

Why the paperwork comes first: Section 442-l

New York has a specific rule against after-the-fact referral fees. Under Real Property Law §442-l, a broker or salesperson cannot demand or receive a referral fee for finding a seller after a listing agreement is signed, for finding a buyer after an offer is accepted, or for finding a property after a buyer agency agreement is signed, unless reasonable cause for the payment exists. A violation is also a deceptive act under General Business Law §349. An agreement signed before the NYC agent first speaks with your client avoids the problem.

How a NYC referral actually works

1. You share your client's goals, timeline, and budget with the NYC agent.
2. Both brokerages sign a written referral agreement before the client is contacted.
3. The NYC agent represents your client through the search, the offer, and the closing.
4. You receive updates at each milestone, and your fee is paid at closing with a copy of the settlement statement.

My agent referral program has the agreement ready to sign and a one business day response.

Active NYC Listings

A sample of what your client could be looking at across NYC

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Active

$549,000

245 E 54TH Street #4K

Sutton Place

1 bd 1 ba 700 sf

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Co-op · 1977 RLS #RLS20073246

Active

$1,650,000

7 MT MORRIS Park W #7D

South Harlem

3 bd 3 ba 1,379 sf

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Condo · 1909 RLS #RLS20122870

Listing information provided courtesy of the Real Estate Board of New York's Residential Listing Service (RLS). Information is deemed reliable but not guaranteed. Sale listings verified. ©2026 REBNY. RLS data displayed by Keller Williams NYC.

What the referral agreement contains

The agreement is a short document between the two brokerages. It names the client and the transaction type, states the referral fee, confirms both sides hold active licenses, and sets a term covering that client. A client who returns later stays covered if the return falls inside the term you signed.

How the referral fee is structured

The Department of State says a broker's compensation is not set by statute or regulation, so the amount and terms are negotiable. The referral fee is a standard referral fee agreed in writing up front, paid broker to broker at closing out of the NYC agent's side of the commission, and never added to your client's costs. A rate that stays vague or unsigned until the deal is in motion is a red flag.

What happens after you send the client

Since the 2025 REBNY rule, a Buyer Representation Agreement is signed before any showing, so a referred buyer signs one with the NYC agent before touring. New York State Department of State rules also require brokers to provide a list of attorneys rather than a single recommendation, so your client chooses a real estate lawyer from a list. You hear back at four points: when the NYC agent reaches the client, at signing, at contract, and at closing. If the client stops replying, you hear that too.

Why a NYC client needs a local specialist

Co-op purchases run through a board package of financials and references followed by a board interview, and most packages now go in through online portals such as BoardPackager or Domecile. Condos come with offering plans to read. Rentals fall under the FARE Act, which changed who pays the broker fee. An agent who has handled co-op board packages, condo offerings, and townhouse sales covers all of it, in English and Spanish.

How to vet a NYC referral partner

See the NYC buyer guide, the neighborhood market reports, and the reviews page.